05:41 AM EDT, 03/14/2024 (MT Newswires) -- (Updates to add Federal Home Loan Bank's comment in the fifth and sixth paragraphs.)

Silicon Valley Bank (SVB) last year paid $285 million in fees to wind down financing from the Federal Home Loan Bank system after its collapse, Bloomberg News reported Tuesday, citing an internal government document.

The fee, incurred as part of the failed effort to save the bank, was the largest of its kind since before the 2008 financial crisis, Bloomberg said.

Federal Home Loan Banks are a system of 11 government-backed lending institutions that provide banks with liquidity to finance mortgages.

San Francisco's Federal Home Loan Bank lent Silicon Valley Bank $30 billion to counter a bank run last year. After it collapsed, a bridge bank that took over its assets decided to pay the money back early, along with $285 million in early repayment fines, Bloomberg reported.

A spokesperson at Federal Home Loan Bank of San Francisco confirmed Wednesday that the Silicon Valley Bank's bridge bank opted to pay the loan back early but said any "well-understood and documented prepayment fees" were spelled out in preset formulas established by federal agencies.

"The decision to prepay their advances was strictly that of the Silicon Valley Bridge Bank," the spokesman said in an email to MT Newswires. "Whether prepayment fees were going to be charged on the prepaid advances was determined by the contractual terms of the advance, not the discretion of the Federal Home Loan Bank of San Francisco."

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)